Gold futures score first gain in five sessions

Copper ends at more than two-month high on China reform news

WilliamL. Watts

SAN FRANCISCO (MarketWatch) — Gold futures on Monday settled higher for the first time in five sessions, finding support from turmoil in Ukraine and expectations that India may soon ease restrictions on gold imports.

Copper prices were also a standout, with prices marking their highest close in more than two months in the wake of a new blueprint for capital-market reforms in China, the world’s biggest consumer of the metal.

Gold for June delivery
US:GCM4
rose $8.20, or 0.6%, to settle at $1,295.80 an ounce on the Comex division of the New York Mercantile Exchange after tapping a high of $1,304.50 in electronic trading. Prices had tallied a loss of about 1.7% in the last four trading sessions.

July silver
US:SIN4
rose 42 cents, or 2.2%, to end at $19.54 an ounce, its highest in nearly a week.

Pro-Russian separatists declared victory in Sunday’s recession referendums, contributing to rising tensions as Moscow appeared to challenge assertions by Western powers and Kiev that the vote was illegitimate.

Reuters

Members of a local election commission empty a ballot box as they start counting votes of today's referendum on the status of the Luhansk region of Ukraine on Sunday.

“There is no doubt that only Ukraine is supporting gold prices now,” said Chintan Karnani, chief market analyst at Insignia Consultants, based in New Delhi.

“Investors are now asking themselves (a) what kind of new sanctions will be imposed on Russia (b) what will be effects of Russian counter retaliation (if any in future) on European economy [and] (c) how long will the Ukrainian crisis continue,” he said in emailed comments.

A rally in equities failed to draw much attention away from the precious metal. Stocks rose around the globe, with China posting strong gains after the introduction of a blueprint for an overhaul of capital-market regulations. U.S. stocks traded solidly higher, with the Dow Jones Industrial Average
DJIA, -1.11%
tapping an all-time high.

Over in India, expectations that the nation may soon lift import restrictions on gold continue to grow as Monday marked the last day of elections there.

“India opening up gold imports or reducing duty on gold imports will be bullish for gold in the short term,” he said. “Jewelers and buyers will be using lower gold premiums to increase gold inventory and the common man will buy more gold.”

Some strategists remained downbeat on the outlook for gold, however.

Strategists at Barclays said gold was likely to remain stuck in a range, with the lack of investor appetite to push gold higher evident in the reduction of exchange-traded fund gold holdings over the past month. They see gold maintaining a choppy, range-trading pattern between $1,265 and $1,330 an ounce.

MacNeil Curry, technical strategist at Bank of America Merrill Lynch, said in a note Monday that it’s time to sell gold. Further gains should not exceed the $1,315.70 high seen on May 5 and cannot exceed the March 14 high of $1,331, he said, adding that prices could fall to $1,215 or below.

Copper at two-month high

Copper prices, meanwhile, soared along with Chinese indices “after the country’s government announced over the weekend plans to allow more foreign investment in listed shares, increase capital flow quotas, and develop tools for increasing commodity trading,” said Colin Cieszynski, senior market analyst at CMC Markets.

July copper
US:HGN4
tacked on nearly 7 cents, or 2.2%, to end at $3.15 a pound. Tracking the most-active contract, prices saw their highest settlement since March 6, FactSet data show.

Rounding out action on Comex, prices for the platinum group metals also climbed, with July platinum
US:PLN4
up $12, or 0.8% at $1,441.90 an ounce and June palladium
US:PAM4
ending at $808.75 an ounce, up $9, or 1.1%.

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